Insight Expands Into Services

After several years of planning and development, Insight North America has introduced its new services division, which will allow the company to pair its low-price IT product sales with an array of services.

Insight has built its business through offering a broad range of competitively priced IT products, but the direct marketer is now intent on taking a new approach that could shake up its end of the market. Insight Services features five solutions categories: Mobilize IT for mobile and wireless technologies; Secure IT for security; Manage IT for infrastructure; Store IT for storage and data protection; and Print IT for imaging, printing and document management. For each practice area, Insight will provide full "life-cycle solutions," from business assessment to solution design, and deployment and asset disposal.

Insight president and CEO Rich Fennessy, who was tapped to succeed founder and former CEO Tim Crown last October, says the company is evolving into more of a solution provider instead of a product-fulfillment specialist, a process that began nearly three years ago with Insight's acquisition of fellow solution provider Comark. Fennessy says the services division will target customers in the SMB market.

"In the past, we would call an SMB client, and the historical Insight discussion would revolve around how many notebooks the customer needed, speeds and feeds, and a competitive price," Fennessy says. "What we're doing now is initiating needs-based discussions with SMB clients and finding out that the customer is very concerned about notebook security and remote access."

During the past several months, and prior to the services division's official launch, company officials already have begun rolling out its services offerings; the move appears to have had a positive effect. In its most recent quarter, Insight Enterprises, parent company of Insight North America and No. 24 on the 2005 VARBusiness 500, reported an 8 percent jump in sales, with $779.4 million. Insight North America, in particular, showed double-digit growth in sales and earnings from operations, as operating margins rose to 2.9 percent. The company says that's the highest margin in the past 11 quarters.

Mike Yates, director of services development for Insight Services, says the move will not only give the company an additional source of high-margin revenue, but also help it strengthen ties with customers. "We've come to realize that you can get low-priced products anywhere these days," Yates says. "That's why we're focusing on our client relationships with this new division."

Insight also believes the strategy will help the company compete better against the likes of CDW as well as other direct marketers. "We're glad that CDW made the decision to outsource their services [via CDW's agent program SolutionsEdge] instead of building it internally," Yates says. "We think this is a true differentiator for us."

The company also says it has invested more than $1 million in sales-force training alone, not to mention the new marketing and advertising push it is making behind Insight Services.